Editor’s Note: Transocean, already under fire for its ownership of the ill-fated rig Deepwater Horizon which exploded and sank in the Gulf of Mexico releasing millions of gallons of BP oil, has found itself in another controversy over its work in Burmese waters.

The company appears to be under U.S. investigation for possible violations of restrictions on doing business with individuals associated with the junta that governs Burma, according to a report by Thomas Maung Shwe at Mizzima, a Burmese news organization run by exiled Burmese journalists:

U.S.-Swiss drilling company Tranoscean has admitted it is under investigation by the U.S. Treasury over its “operations in Myanmar [Burma]”. The probe comes amid intense public scrutiny since its rig blew up in the Gulf of Mexico.

Since the explosion on Tranoscean’s rig in April caused America’s worst oil spill, the company hired by BP has acknowledged in its latest regulatory 10-Q filing with the Securities and Exchange Commission (SEC) it had “recently received an administrative subpoena” from the Treasury Department’s Office of Foreign Assets Control (OFAC) regarding its “operations in Myanmar.” The filing was submitted on Aug. 4.

The subpoena from the U.S. government’s sanctions enforcement division came after Mizzima reported last May that earlier regulatory filings showed Transocean was hired late last year to do drilling work in Burmese waters co-owned by a company controlled by Stephen Law, a junta crony businessman alleged by the U.S. government and analysts to be a major drug-money launderer.

“OFAC’s administrative subpoena authority”, according to the U.S. Treasury department’s Web site, “generally provides the basis for OFAC to require the production of whatever additional information it may require to assess its enforcement response to the apparent violation.”

As a subpoena is not voluntary, failure to comply with such an administrative writ is a serious violation.

Mizzima’s report of Transocean’s ties with a blacklisted Burmese narcotics-trafficking clan was picked up in a front page story in The New York Times, which also detailed the firm’s questionable practices in Iran, Norway and Syria.

Wong Aung, an observer of Burma’s natural resource sector and international co-ordinator for the Shwe Gas Movement, a coalition of Burmese organizations opposed to offshore gas drilling in the country’s ecologically sensitive coastal regions, is pleased the U.S. government has listened to calls to investigate Transocean’s shady dealings in Burma.

He said it was “inconceivable that Transocean was unaware” that the oil and gas rights in the waters they were drilling in were co-owned by Burma’s infamous Law family.

Stephen Law, aka Tun Myint Naing, his Singaporean wife, and his “narco warlord” father are all on OFAC blacklists, officially called the Specially Designated Nationals (SDN) list. All three are also listed in similar European Union travel bans and sanctions lists.

Transocean International’s corporate 8-K filing with the SEC last Nov. 2 showed that Chinese state-run energy company CNOOC hired Transocean’s semi-submersible Actinia, a Panamanian-registered drilling rig, to operate in Burma from October to December.

According to the CNOOC Web site, all of the firm’s stakes in Burma’s gas industry are held in partnership with China Focus Development (formerly known as Golden Aaron) and China Global Construction, with CNOOC as the operator.

China Focus Development is a privately owned Singapore-registered firm whose sole shareholders are Stephen Law and his wife, Ng Sor Hong, aka Cynthia Ng. The U.S. and European Union sanctions list show Ng Sor Hong to be chief executive of the firm, which is also among more than a dozen companies controlled by Law on the OFAC blacklist of banned Burma-related entities.

Law’s Sino-Burmese father Lao Sit Han, aka Lo Hsing Han, is believed by U.S. drug-trafficking analysts to have controlled one of Southeast Asia’s best-armed narcotics militias during the 1970’s.

After coming to an understanding with the Burmese regime, Lao Sit Han moved to Rangoon where he reportedly used the profits from his drug empire to expand into other areas including operating ports through the family controlled Asia World, a U.S.-blacklisted firm over which Lao Sit Han is chairman.

Stephen Law is the managing director of Asia World and is believed to be the driving force behind what has become of one of Burma’s largest conglomerates. As well as running Burma’s largest deepwater port, the firm owns lucrative toll highways, hotels and is also involved in many construction projects, including building Rangoon’s Traders Hotel and refurbishing the Rangoon airport.

According to a Febuary 2008 statement by the U.S. Treasury Department: “In addition to their support for the Burmese regime, Steven Law and Lo Hsing Han have a history of involvement in illicit activities.”

“Lo Hsing Han, known as the ‘Godfather of Heroin’, has been one of the world’s key heroin traffickers dating back to the early 1970s. Steven Law joined his father’s drug empire in the 1990s and has since become one of the wealthiest individuals in Burma,” the Treasury statement said.

Transocean See Scant Liability

Referring to the OFAC probe into their Burmese dealings and a similar one regarding the firm’s activities relating to Iran, Transocean stated in its filing that: “We do not expect the liability, if any, resulting from these inquiries to have a material adverse effect on our consolidated statement of financial position, results of operations or cash flows.”

Wong Aung said he hoped that Transocean was justly punished for their apparent violation of U.S. sanctions against Burma and the Law narcotics clan.
He told Mizzima: “I’m sure Transocean will fight hard to get out of this, and I hope they aren’t just given a slap on the wrist but a meaningful penalty that will send a clear message to multinational firms not to engage in business with the Burmese regime and one of Asia’s most notorious narco [narcotics-profit] laundering families.”

He said the “Transocean investigation should be a wake-up call for the U.S. government to more stringently monitor what firms are doing in Burma and other places of concern. Both the Treasury Department and the SEC must force multinational firms to be more transparent about their activities overseas.

“Far too often Western firms are allowed to ignore sanctions using offshore subsidiaries and secret contracts; even their large institutional shareholders don’t know what the firms are necessarily doing in Burma.”

Mizzima was unable to reach Transocean or OFAC by the time this story was completed.

Driller’s Denial Challenged

The New York Times reported on July 7 that Transocean had claimed in a statement sent to the paper that the firm had not violated U.S. sanctions on Burma because neither Stephen Law nor his father’s names appeared in their contract with CNOOC. The statement failed to confirm or deny whether his wife, Ng Sor Hong, or the firm she heads, China Focus, appeared in Transocean’s contract.

“It’s extremely unlikely that such a contract would not state who co-owns the gas rights to the area where the drilling would occur,” said rights activist Wong Aung. “The U.S. and Swiss government must force Transocean to fully disclose the text of this contract.”

The company’s statement to the Times also included the cryptic claim that: “No Transocean affiliate that is subject to the U.S. ban has ever done business in Myanmar [Burma].”

As Transocean, formerly based in the U.S., is now headquartered in landlocked Switzerland (where the Swiss press reported that it employs a mere 12 people), and the Actinia rig sent to drill for CNOOC is registered in Panama, Transocean will likely argue that is not subject to U.S. sanctions. The fact that the OFAC has launched an investigation shows that the U.S. government thinks otherwise.

Other Swiss Firm Fined

Credit Suisse, a major Swiss bank with considerable business in the U.S. agreed last December to pay an unprecedented $536 million fine after sanctions enforcers at the OFAC concluded the bank had violated American financial sanctions against Iran, Burma, Libya, Sudan, Cuba and the former Liberian regime of Charles Taylor.

On announcing the settlement, U.S. Attorney General Eric Holder said the bank had illegally enabled countries under sanctions to circumvent the bans by creating “a business model to allow these rogue players access to U.S. dollars”.

Although the U.S. government investigation found that most of the violations related to transactions with Iran, Credit Suisse, under the terms of the settlement, admitted that it had illegally sent money to Burma on 30 occasions. Credit Suisse also acknowledged that over a 20-year period it had sent illegally a total of more than $1.6 billion in funds to the sanctions-bound countries.

A 10-Q form is an SEC filing that must be submitted quarterly with the SEC and contains similar information to the annual 10-K form, however the information is generally less detailed, and the financial statements are generally unaudited.

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